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Finance Bill, 2025, limits tax scrutiny to undisclosed income in search cases

Now, tax authorities can reassess hitherto undisclosed earnings only, and not income that’s already been declared.

March 27, 2025 / 15:34 IST
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Tax authorities can now assess only income that was not reported earlier

The Finance Bill, 2025, has introduced a key amendment that confines `block' assessments in tax search and seizure cases only to undisclosed income.

`Block' assessments allow tax authorities to examine income over an extended period, focussing on concealed earnings that were not disclosed in  tax filings. But the fact that even income already reported in tax returns could be reassessed under the earlier system led to disputes over excessive scrutiny and multiple tax demands.

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The new provision prevents reassessment of previously declared earnings, offering greater certainty to taxpayers and reducing the risk of extended tax disputes.

What changes?